The EC package covers four directions – cloud and AI development, open source strategy, energy digitalization and AI application, and chips. The first European Chips Act was adopted in 2023, and its main goal is to increase the EU’s share in the global semiconductor market from approximately 10% to 20% by 2030.
In the proposal for the second Chips Act, the EC states that Europe currently produces less than 10% of the world’s semiconductors, and the supply of the most advanced chips – smaller than 5 nm – to Europe is dependent on US and Asian companies.
So, what essential changes are foreseen in the proposal for the second Chips Act and by what means will Europe seek to increase chip production?
It is encouraging that the proposal focuses on commercialization and reducing bureaucracy. It is planned to accelerate the issuance of permits for strategic semiconductor projects – permit issuance procedures should not last longer than 12 months. The EC also emphasizes a faster path from pilot projects to commercial production.
Unlike the first Chips Act, which focused solely on chip supply, the second one pays more attention to demand: new measures such as the Demand Forum and Demand Accelerators will allow for pilot projects, the creation of partnerships, and the involvement of industrial companies in chip production at early stages.
The Chips Act also expands the concept of strategic projects: it will cover not only factories, but also chip design, advanced packaging, specialized materials, equipment, and supply chain resilience solutions. In addition, a European Semiconductor Regions of Excellence label is being introduced to attract investment into strong regional ecosystems.
Evaluating the proposals presented, one would first like to welcome the fact that we are moving in the right direction. Measures such as simplified permit issuance, faster commercialization, and attempts to stimulate demand address fundamental European problems and are particularly important for semiconductor market startups.
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On the other hand, the proposal also contains unanswered questions. The EC expects to attract private investment, but specific guarantees, tax incentives, or additional financing mechanisms that would help attract venture capital to the chip sector are not named in the document. In many cases, the sources of project funding are also unclear.
Although the new Chips Act proposal talks a lot about creating demand, it is still difficult to predict how commercially significant this demand will be and whether it will translate into real orders. In the semiconductor market, Europe competes with the US and Asia, where funding, production ecosystems, and decision-making are often significantly faster. Therefore, it is important how quickly Europe will manage to untangle itself from the snares of bureaucracy.
As we have already seen, it can also hinder business in our country. The Lithuanian high-tech group “Teltonika”, which plans billions in investments in chip production in Liepkalnis, the capital, announced in 2024 that it was halting its chip factory project in Vilnius due to ensuring electricity capacity and other bureaucratic obstacles. Only after the company announced the termination of the project did the authorities rush to find solutions and eventually found them. This case should be an important lesson for our country’s institutions to act faster, especially when it comes to such important areas as chip production.
The European Chips Act proposal is a good time to think about how to develop the semiconductor ecosystem in our country as well. In my opinion, it is important for Lithuania not to forget the use of laser and photonics competencies in the semiconductor industry. Lasers are important in material processing, micro-cutting, measurements, testing, advanced chip packaging, and other technological chains. Therefore, it would be meaningful for Lithuania to develop technologies, equipment, and services that are necessary for the semiconductor industry in Europe.
For this, it is necessary to invest in talent now – to increase the number of students in physics, engineering, microelectronics, photonics, materials science, and other technological fields and to create conditions for acquiring practical knowledge.
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